Correlation Between Hitek Global and Karooooo

Can any of the company-specific risk be diversified away by investing in both Hitek Global and Karooooo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hitek Global and Karooooo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hitek Global Ordinary and Karooooo, you can compare the effects of market volatilities on Hitek Global and Karooooo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hitek Global with a short position of Karooooo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitek Global and Karooooo.

Diversification Opportunities for Hitek Global and Karooooo

-0.49

Correlation Coefficient

Hitek Global  Karooooo

Very good diversification

The 3 months correlation between Hitek and Karooooo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hitek Global Ordinary and Karooooo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karooooo and Hitek Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hitek Global Ordinary are associated (or correlated) with Karooooo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karooooo has no effect on the direction of Hitek Global i.e., Hitek Global and Karooooo go up and down completely randomly.

Pair Corralation between Hitek Global and Karooooo

Given the investment horizon of 90 days Hitek Global Ordinary is expected to under-perform the Karooooo. But the stock apears to be less risky and, when comparing its historical volatility, Hitek Global Ordinary is 1.04 times less risky than Karooooo. The stock trades about -0.06 of its potential returns per unit of risk. The Karooooo is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,694  in Karooooo on September 1, 2024 and sell it today you would earn a total of  786.00  from holding Karooooo or generate 21.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hitek Global Ordinary  vs.  Karooooo

Hitek Global Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hitek Global Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Karooooo

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Karooooo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Karooooo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hitek Global and Karooooo

The main advantage of trading using opposite Hitek Global and Karooooo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitek Global position performs unexpectedly, Karooooo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Karooooo will offset losses from the drop in Karooooo's long position.

The idea behind Hitek Global Ordinary and Karooooo pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.